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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15749
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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How do I calculate tax I owe on buy to let property sold in

Customer Question

How do I calculate tax I owe on buy to let property sold in last year?
Submitted: 10 months ago.
Category: Tax
Expert:  TonyTax replied 10 months ago.
Hi. Was the property ever your main home? When exactly was it sold? Depending on your answer, I may need further details.
Customer: replied 10 months ago.
Yes. It was my home until 2009 and then my ex-husband continued to live there until March 2011.
Customer: replied 10 months ago.
(Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Customer: replied 10 months ago.
Phone call only if straight away, or happy to continue typing
Expert:  TonyTax replied 10 months ago.
I'll be happy to continue typing as I can deal with the question easily. A phone call will cost more.
Customer: replied 10 months ago.
That's fine with me.
Expert:  TonyTax replied 10 months ago.
Can you give me some details please. Was it jointly owned? When did you buy it exactly (month and year)? What did it cost to buy? What did you sell it for and when exactly (month and year)? When in 2009 did you move out? Was it let since March 2011 to when it was sold?
Customer: replied 10 months ago.
No, never jointly owned...he retained his own....I bought it April 1993 or 1994. I remortgaged once a couple of years later to finance renovations and then in 2008 when it was valued at 350K. Sold for 395k in April 2015.
Expert:  TonyTax replied 10 months ago.
Thanks. What did you pay for the property when you bought it? How much did the improvement work cost? The cost of general repairs and redecoration cannot be claimed. Improvements are work that would have enhanced the property value. Did you exchange contracts to sell before 6 April 2015 or after 5 April 2015? Were you living in it from April 1993 or April 1994 up to the month in June 2009 that you moved out? What was that month?
Customer: replied 10 months ago.
I think it was 65k it had to be completely gutted and over time I must have spent about 50k - the works did...many were a condition of the mortgage....it needed everything to be replaced in some cases walls and ceilings...it had been rented out and no works had been carried out since it was built in 1930's? I can't remember exactly...I think it was after...and yes, lived there continuously from time i bought it after it was habitable....I moved out in October 2009.
Customer: replied 10 months ago.
I mean I can't remember exact dates of exchange and completion but it was in April....lots of things going on...I'd just lost my father on 29/3 and other family things...
Expert:  TonyTax replied 10 months ago.
Thanks. Leave this with me while I do some calculations. They will take a while so please bear with me.
Customer: replied 10 months ago.
No problem...I'm going thru my e-mails etc to see if I can give you exact dates...
Customer: replied 10 months ago.
I can't find exchange date but definitely after 5th....completed on 21st April....
Expert:  TonyTax replied 10 months ago.
I'm using April 1994 as the purchase date and will use 2015/16 as the tax year of disposal.
Customer: replied 10 months ago.
Looking back over the e-mails I think it was April 1993...and disposal year - yes, 15/16, thanks
Expert:  TonyTax replied 10 months ago.
OK. I'll just recalculate.
Customer: replied 10 months ago.
Sorry...thanks
Customer: replied 10 months ago.
....the £395 was before costs etc...mortgage was apron 230k
Customer: replied 10 months ago.
I don't know if it makes a difference, but when I moved out in 10/09, I was still married...in fact still am to my ex...
Expert:  TonyTax replied 10 months ago.
You sold the property in April 2015 for £395,000 and made a gain of £280,000 (£395,000 - £65,000 - £50,000). You can also deduct the costs of purchase and sale (legal fees, stamp duty, survey fees, selling agent fees). Total period of ownership to April 2015: 264 months Period of owner occupation: 198 months Period of letting: 49 months Period of vacancy: 17 months (occupied by husband) Exempt gain: £229,091 (£280,000 / 264 x 216 (198 + last 18 months of ownership) Letting period gain: £32,879 (£280,000 / 264 x 31 (49 - last 18 months of ownership) Vacant period gain: £18,030 (£280,000 / 264 x 17) Gross Non-Exempt Gain: £50,909 (£32,879 + £18,030) Letting Relief: £32,879 (lesser of £40,000, £229,091 and £32,879) Annual CGT Exemption: £11,100 Net Taxable Gain: £6,930 CGT @ 18% or 28% or a combination of the two rates depending on the level of your income in 2015/16. Look here to see how to calculate your CGT rate. Refer to HS283 for information on the main residence and CGT. A married couple can only have one main residence between them and you said your husband had his own home at the same time you had yours. In the absence of a main residence election, the question as to which was your main home will be decided on the facts, broadly, the one you spent most time living in. I hope this helps but let me know if you have any further questions.
Expert:  TonyTax replied 10 months ago.
HMRC may ask to see evidence of the improvement costs in the form of receipts and invoices. Photographic evidence may also help. The can disallow expenditure which cannot be proved.
Customer: replied 10 months ago.
His was always let...mine was the family home.....I don't have much in terms of evidence because of the period covered...doubt I have anything from original work...
Customer: replied 10 months ago.
...Just to confirm, the amount I owe is, £6,930....I haven't worked for a while which I why I decided to sell...
Expert:  TonyTax replied 10 months ago.
OK. The fact that the other property was always let makes things easier. I'd claim the costs as it is highly likely you won't be asked for proof of the expenditure. I'll do do some calculations excluding the £50,000 to see what effect that would have and post the figures here later. The £6,930 is the taxable gain, not the tax. The CGT cannot be more than 28% of the taxable gain.
Customer: replied 10 months ago.
That's great...thank-you so much...I'll keep this window open....
Expert:  TonyTax replied 10 months ago.
If your income in 2015/16 is no more than £42,385 including the £6,930 you will pay CGT at 18%.
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Satisfied Customers: 15749
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Customer: replied 10 months ago.
No...I've had no income other than the rental....it would be £9240p.a. but the I had difficult tenants and were always make deductions, so less than that...
Customer: replied 10 months ago.
...sorry..auto correct makes some silly changes...
Customer: replied 10 months ago.
Hi TonyTax,I haven’t received the recalculation you said you would do – excluding the £50k for renovations back in 1993. Do you remember?
I have been logged out of the page we were conversing on so have lost your advice....I don’t know if you have a copy? I don’t know what my log in details were....I don’t think I set up an account as such.
If you can help with either of these I’d appreciate it.
Expert:  TonyTax replied 10 months ago.
I'll get back to you on that leter this afternoon. I need to find my new calculations.
Expert:  TonyTax replied 10 months ago.
Here are the revised figures: You sold the property in April 2015 for £395,000 and made a gain of £330,000 (£395,000 - £65,000). You can also deduct the costs of purchase and sale (legal fees, stamp duty, survey fees, selling agent fees).Total period of ownership to April 2015: 264 monthsPeriod of owner occupation: 198 monthsPeriod of letting: 49 monthsPeriod of vacancy: 17 months (occupied by husband)Exempt gain: £270,000 (£330,000 / 264 x 216 (198 + last 18 months of ownership)Letting period gain: £38,750 (£330,000 / 264 x 31 (49 - last 18 months of ownership)Vacant period gain: £21,250 (£330,000 / 264 x 17)Gross Non-Exempt Gain: £60,000 (£38,750 + £21,250)Letting Relief: £38,750 (lesser of £40,000, £270,000 and £38,750)Annual CGT Exemption: £11,100Net Taxable Gain: £10,150CGT @ 18% or 28% or a combination of the two rates depending on the level of your income in 2015/16. Look here to see how to calculate your CGT rate.
Expert:  TonyTax replied 10 months ago.
Here is the CGT rate link but given that you have no income at present, you should pay CGT at 18%.
Customer: replied 10 months ago.
Thank-you, TonyTax. I really appreciate this.
Expert:  TonyTax replied 10 months ago.
No problem.

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